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Cyber Crime: Shan Shi Was Convicted Of One Count Of Conspiracy To Commit Theft Of Trade Secrets

Texas Man Convicted of Conspiracy to Commit Theft of Trade Secrets

A Texas man was convicted today by a federal jury in Washington D.C. of conspiracy to commit theft of trade secrets.

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Following a nine-day trial, Shan Shi, 54, of Houston, Texas, was convicted of one count of conspiracy to commit theft of trade secrets. Shi was originally indicted in June 2017 for conspiracy to commit theft of trade secrets, and a superseding indictment containing one count of conspiracy to commit economic espionage and one count of conspiracy to commit money laundering charges issued in April 2018. Shi was acquitted on the other charges.

“Shan Shi and his coconspirators went to great lengths to cash in on the Chinese government’s desire to obtain syntactic foam technology,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “As this case demonstrates, the Department of Justice is and will remain on the front lines of defending U.S. companies against the theft of their trade secrets.”

“The jury’s verdict makes clear that Shan Shi conspired to steal trade secrets by poaching employees from a U.S. company and enticing them to bring technical data to his company,” said Assistant Attorney General for National Security John C. Demers. “He did this against the backdrop of China’s strategic plan to close the gap between China and United States in buoyancy technology and with the benefit of millions of dollars of funding from China. Like our many other prosecutions implicating China’s economic aggression, this case exemplifies both the threat to American companies and our commitment to confront it.”

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“We take very seriously the theft of intellectual property that was developed in the United States through long years of research, development, and innovation,” said U.S. Attorney Jessie K. Liu for the District of Columbia. “Shi chose to steal the secrets of a U.S. company rather than do the hard work necessary to succeed honestly in the free market. He is now being held accountable for that choice.”

“Shan Shi attempted to obtain sophisticated U.S. technology with both military and civilian uses for the ultimate benefit of China,” said Assistant Director John Brown of the FBI’s Counterintelligence Division. “It is no secret that China is determined to achieve superiority in virtually all high-tech areas, and the FBI is equally determined to stop individuals who commit illegal acts to help China achieve its goals. The stakes are high both for U.S. national security and for American companies who invest so much money and time on research and development.”

“FBI Houston’s elite counterintelligence investigators worked for years to dismantle Mr. Shi’s prolific network and bring him to justice,” said Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office. “Our highly trained agents and intelligence analysts work every day to protect American businesses from unscrupulous foreign adversaries. We are pleased by today’s verdict, and we will continue to aggressively protect America’s economic security and intellectual property from those who would do us harm.”

Evidence introduced at trial established that Shi conspired with others to steal trade secrets from a Houston-based company, Trelleborg Offshore, relating to syntactic foam, a strong, lightweight material with commercial and military uses that is essential for deep-sea oil and gas drilling. In public statements of its national priorities, China has made clear its desire to develop this technology. Shi sought to obtain information about syntactic foam for the benefit of CBM-Future New Material Science and Technology Co. Ltd. (CBMF), a Chinese company based in Taizhou, and for the ultimate benefit of the People’s Republic of China. Four of Shi’s codefendants—some of whom worked at Trelleborg—had pleaded guilty to conspiring to steal trade secrets, and two testified as cooperating witnesses at trial. From 2014 to 2017, CBMF sent Shi’s company in Houston approximately $3.1 million from China in order to promote Shi’s activity in the United States.

Sentencing has been set for Oct. 25, 2019.

The FBI’s Houston Field Office conducted the investigation. Senior Counsel Joss Nichols of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jeffrey Pearlman and Luke Jones for the District of Columbia are prosecuting the case.

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